Planet M to double revenues, up store count

Planet M, the entertainment and lifestyle chain of the Videocon Group, plans to double its revenues by the next financial year even as lifestyle retailing is witnessing a slowdown in the country as shoppers defer discretionary spending. Planet M has over 300 stores now.

The chain plans to achieve this by opening new stores, selling more mobile handsets, alliances with companies and joint marketing efforts with manufacturers.

“We have opened nearly 230 stores in the last one year. We are doubling our store count by the end of next financial year. Expansion will automatically give us more mileage in the business,’’ said Subir Ghosh, chief executive of Planet M.

The chain had plans to open 400 stores and was expecting a revenue of Rs 650 crore in FY09. “We might come close to our store target in FY10,’’ Ghosh said, declining to comment on revenue numbers.

Analysts are sceptical about the expansion of music and mobile phone chains in the current scenario. “Expansion looks difficult for music category as there is widespread downloading practice. As far as mobiles go, it has very low margins and stiff competition from grey market,’’ said Susil Dungarwal, a Mumbai-based retail expert.

According to estimates, durable and lifestyle sales have fallen 15-20 per cent in October-December 2008 compared to the same period last year.

When Videocon’s durable chain Next acquired Planet M from Bennet Coleman & Co in November 2007, Videocon Chairman V N Dhoot said that the group plans an over six-fold increase in Planet M’s turnover from around Rs 150 crore to around Rs 1,000 crore in a couple of years.

‘’We will invest Rs 500 crore and have 1,000 Planet M stores all over the country,’’ Dhoot said after the acquisition.

Last year, the chain entered into mobile retailing to garner higher revenues and currently it draws nearly 50-60 per cent business from mobile handsets. “Mobiles are top-line-led business and music and entertainment is margin-led business,’’ Ghosh said.

As a category, while mobile phones offer a gross margin of mere 6-8 per cent, music offers a whopping 30 per cent. But the differentiating factor is the sheer size of both the segments and growth rates.

According to estimates, mobile and allied segments are Rs 1 lakh crore industry and growing at 60 per cent annually, whereas music and entertainment is a Rs 2,000-crore segment and growing at a mere 7-8 per cent.

Ghosh said the chain is also focussing on impulse buys such as T-shirts, sunglasses, and other accessories as they carry higher margins. “We are reaching out to larger audience by marketing campaigns, loyalty programmes, new partnerships with brands and tie-up with corporates,’’ he said.

On the slowdown hurting the retailers top lines and margins, he said “You have to work harder to hold it where it is today.’’

Planet M runs mega stores of 2,000-5,000 sq ft, super stores with a store area of 1,500 sq feet and the rest with a store area of 500 sq feet.